Beyond the CEO

By Jeff Bailey
April 27, 2009 06:47 PM

Most of us aren’t in a position to actually tout stocks or cheer on the market, so we don’t have to worry about being pilloried by John Stewart on The Daily Show, like Jim Kramer was.

Yet still, aren’t business journalists as a whole partly to blame for the financial meltdown? And, if so, how might we do things differently going forward?

Without a doubt, there was plenty of great pre-collapse coverage – work by reporters who early on warned readers about the unsustainable rise in housing prices, the abusive practices of lenders, and greedy behavior by big companies and their CEOs.

But more could have and can be done.

It is time we rethink two widespread approaches to business coverage that I believe contribute to the arrogance of corporate management. Arrogance, which in turn plays a part in creating a financial bubble by reinforcing many executives’ narrow focus on stock price and the pervasive belief that anything good or bad that occurs at a company is due to the CEO.

Looking past share prices
The first is the tendency to size companies up solely, or mostly, on an investment basis. Of course, that’s how CEOs like to think. If the stock’s up, goes the reasoning, they must be doing something right. That itself is flawed thinking because even leaky boats are lifted, for a while at least, on a rising tide. As we’ve seen in recent months, the stock market is not all-knowing. And a rising share price can obscure shoddy behavior and shaky finances.

But whether a company’s financial performance is sound or not, how it treats its customers and workers are equally important measures. (In an earlier column, I argued for targeting employees and customers as a way of broadening the appeal of business coverage. And this column provides more resources for writing about business from the point of view of workers, as opposed to executives.)

Exposing problems in these areas, even when a company’s stock is soaring, might help take a little wind out of the sails of the CEO. After all, CEOs are typically surrounded by “yes” people. Wall Street analysts and investment bankers also suck up to CEOs. Being reminded, in our stories, when they are poorly serving customers or slighting their workers could be a check on hubris. And it might remind them that, while they work for shareholders, their companies have an impact far beyond the investing public. We’re business reporters, after all, not merely stock market reporters.

Of course, as journalists we’re reporting the news for the most part, not trying to steer it. I’m simply arguing that a humbler CEO might be the byproduct of coverage that extends beyond the priorities of the executive. Regardless, the goal should be more complete and compelling coverage.

CEO in the spotlight
The other approach to coverage that needs to be moderated is using the CEO as the personification of the company. It’s a nifty story-telling device – one man, a big challenge, the whole world watching – but it has been badly overdone. (Mea culpa: it’s an approach I’ve used plenty, and I’m sure one I’ll use again in the future.) Sure, there are many situations when the CEO is the right person to build the story around. But it has become a default approach, with editors and reporters valuing top-level access over true insight.

A company’s fortunes rise and fall, as we’re seeing right now, on the general economy and on conditions in the industry. Less frequently does some brilliant or horrible move by management separate one widget maker from its competitors.

Even if the story isn’t overly positive, the practice contributes to CEO arrogance encouraging them to think of themselves as the embodiment of the company.

Thus, if I had it to do over again, I’d take back this profile of Angelo Mozilo, at the time the CEO of Countrywide Financial. I was delighted at the time that he talked about his personal resentment of Ivy Leaguers and money center bankers. And the story had the requisite caveats: “But the history of the mortgage industry is full of nasty surprises that sank or slowed once-strong companies - interest rate swings and frenetic refinancing make the business volatile and risky.”

But in hindsight, the mortgage market at the time didn’t need another story about whether Mozilo was overpaid or even a fresh story about the working-class chip on his shoulder. It needed coverage about how consumers were becoming buried in debt.

It’s harder to report stories from the point of view of customers, low-level employees or middle managers. And it’s also harder to write them engagingly. But most of our readers fall into those categories. And we’d be doing them all a service to remind CEOs that stock price and executive pay aren’t the only business results that matter.

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Copyright © 2009 Donald W. Reynolds National Center for Business Journalism